Muji immersion

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A Mujirushi “unit bath”

Mujirushi, the inexpensive line of “no-brand” merchandise originally designed for the Seiyu chain of supermarkets in the early 1980s, started selling manufactured homes about five years ago. Like Muji’s household products and clothing, all based on simplicity and function, the housing line has since grown and dedicated fans of the brand, called “mujirah,” can now totally immerse themselves in the Mujirushi aesthetic. There are three general designs: the morning house, the wood house and the window house. Depending on the size, it will run you between 15 and 25 million yen. That’s about the same as other, comparably-sized manufactured homes by companies like Sekisui and Tama, except for one striking difference: the Mujirushi house comes with nothing in it–no shelves in the closets, no lighting, no bathroom fixtures. The idea, of course, is that mujirah will outfit their new homes with Mujirushi goods, which is why the designs are flexible. Walls can be moved, room configurations rearranged, panels installed. You can opt for one of those cheap, ugly “unit baths” or have a specially Mujirushi-certified tile bathroom installed. You can put in kitchen cabinets or just a floor-to-ceiling sliding door behind which you can stack all the Mujirushi off-white containers your heart desires. Most importantly, you can make the windows any size you want–and you can make them all CLEAR glass rather than that pebbled or clouded glass that other housing companies insist on.

Though the product itself is not revolutionary and may, in fact, be out of the price range of most mujirah (you still have to provide the land, of course, which is the real cost of property in Japan), the Mujirushi house could shake up the new housing market substantially. Most manufactured home companies make their money by being inflexible: You have to stick to the design they give you, which is why they have so many of them. Mujirushi only gives you three designs, but enough flexibility within those three so that you can meet your needs and wants easily. The value is in the material and the construction, which means that Mujirushi homes not only qualify for eco points, but also for “long-life housing” tax deductions, since they are built to last much longer than the standard 35 years. Consequently, that also means the resale value will be higher than that for a conventional manufactured home. There are now model homes all over the country.

Go west (and south)

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Despite all the Japanese government’s tax and other incentives to get people to buy and/or build new homes, the domestic housing market continues to shrink. Last year, less than 800,000 homes were built, the lowest number since the peak in 1993. So major home manufacturers and builders are looking abroad for greener pastures and even greener consumers. Sekisui House, whose sales have dropped 60 percent since 1993, has made a concerted push into Australia, where the population is increasing thanks to immigration. Sekisui is building both single-family homes and condominiums. They use the same materials and the same methods that they use in Japan, but the exteriors have been adapted for Australian tastes. In 2009, Sekisui built 6,600 units in the suburbs of Sydney alone. One wonders how the Australians feel about Japan’s box-like interior layouts and ugly unit baths.

Next, it’s onward to Russia and China. Daiwa House is building a lot of rental apartments in Shanghai, though mainly for Japanese expats. Many Japanese contractors are concentrating their efforts on the upscale Chinese market–homes in the ¥90 million range. Hitachi and Toto are also making inroads as subcontractors.

Give them services and they will come

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On Mar. 18 the land ministry released its latest list of property values throughout Japan. For at least two years running land prices, both for residential areas and commercial areas, have been dropping nationwide. Of the approximately 27,000 localities checked only 7 recorded any increase in land values. Though the government says the economy continues to show signs of recovery, property values remain stagnant, which means the economy can never recover fully.

The average price decrease for residential areas was 4.2 percent. The drop in the same period a year ago was 3.2 percent. Similarly, the drop for commercial land was 6.1 percent compared to 4.7 percent a year earlier. The drop for commercial land was even steeper in the three metropolitan areas of Tokyo, Osaka, and Nagoya: about 7.1 percent. This greater drop was blamed on a mini-bubble for commercial property in some areas of Tokyo in 2006. Read More

Tentative tenants

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The latest statistics from the Ministry of Internal Affairs and Communications confirms that the number of rental property vacancies is growing. Nationwide there are some 17.7 million rental units, of which about 4.1 million are unoccupied. That’s a vacancy rate of 23 percent.

In Tokyo things aren’t quite as bad, but they’re bad enough if you’re a landlord. The vacancy rate in the capital district is about 16 percent. The highest vacancy rate in the country is in Fukui Prefecture, where it’s a whopping 44 percent. (Fukui’s neighbor, Toyama Prefecture, is famous for having the highest percentage of home ownership in Japan).

You don’t have to be Paul Krugman to understand the reason. The population is dropping and there’s a glut of properties, but as one consultant recently told the Asahi Shimbun the statistics may have a chilling effect on investment. Lately, realtors and developers have been pushing people with money to buy rental properties as an investment since interest rates have been impossible low for more than a decade. But without the promise of tenants such investments won’t provide much in the way of returns. People with money are going to have to find something else to do with it.

Taking out the dead

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In a recent letter to the editor of the Asahi Shimbun a landlord told the story of an elderly tenant of his. The woman was an acquaintance of his mother who lost her apartment when the building she lived in was demolished. She was living on welfare and the letter writer’s mother offered her one of the smaller apartments in her building at a lower rent than normal, presumably as a favor to an old friend. She didn’t charge her a deposit or any gift money.

Eventually, the tenant died, and the landlord could not locate any close relatives. All her worldly possessions were in that apartment. His mother called the local authorities, who told her that when a person receiving public assistance died the cremation costs would be borne by the local government, but as far as disposing of the deceased’s possessions, that was the responsibility of the property owner. And since the mother had not asked her friend for a deposit and she had no savings, they would have to dispose of the effects and clean the apartment with their own money. (As it happens, the tenant was in the hospital for the last several months of her life and was unable to pay her rent during that time also.)

In the end, the man wrote, he paid around ¥150,000 out of pocket to clean up the apartment, which doesn’t sound like very much, but without a system to address such situations, it’s likely that landlords are not going to rent properties to elderly people of little or no means since they might get stuck with a huge cleaning bill if the tenant dies suddenly. And who can blame them?


Thanks for nothing

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One of the Aso administration’s economic initiatives that was retained by the Democratic Party of Japan when it took over the government last year was an allowance for people who had lost their housing as a direct result of having lost their jobs, because, in most cases, the place they were living in was either owned or subsidized by their employers. The DPJ plan originally earmarked ¥70 billion for this allowance, with an additional ¥30 billion for it in the new supplemental budget. Read More

Older and smaller

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Six of the ten elderly people who died in a fire in a Gunma Prefecture nursing care facility last March had been sent to the facility by the Sumida Ward welfare office. Since the fire, the press has talked a lot about this practice of sending poor old people out of cities, where they can’t afford public facilities, to rural areas where the land values and thus the facilities themselves are cheaper. The Tokyo government has carried out an investigation into how to solve this problem, and they’ve come up with an idea.

The Tokyo government wants to increase the number of single rooms in so-called “care houses” by 2,400. Care houses are privately run housing complexes where single seniors–meaning people over 60 years of age–live by themselves. The facilities have baths and serve meals. The Tokyo government has found that rent for these care houses is prohibitively expensive since land agency regulations state that each room of a care house must be at least 20 square meters. The Tokyo government estimates that a 20 square meter room costs about ¥180,000, which is beyond the means of the government itself if it is footing the bill for indigent seniors. So they have asked the land ministry to reduce the minimum standard to 7 square meters, which is the size of a 4.5-tatami room. This, the government estimates, would cost about ¥100,000. In other words, you pay about half for a room that is only one-third as big.

As of 2007 there were only 259 care houses in all of Japan comprising 86,000 resident seniors. Fifty were in Tokyo.

Oldies are goodies

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According to the government, new housing starts in 2009 were the lowest they’ve been in 45 years. At 788,410 units, it was also the first time since 1967 that the number of new housing starts fell below a million, and the 27.9 percent year-on-year drop was the highest since 1974.

Meanwhile, the used housing and reform markets are doing quite well. The used housing sales company Livita, a subsidiary of Tokyo Electric, recently told Asahi Shimbun that about a year ago they noticed a large spike of interest in older homes that has only increased since then. Part of Livita’s business is to buy company housing complexes that are not longer occupied and convert them for sale. A potential buyer chooses a unit and then instructs the company as to how he or she wants it to be remodeled. Read More

Absence makes the heart grow more litigious

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On Jan. 26 the Supreme Court decided in favor of a condominium management association that wanted to charge a nominal fee to non-resident owners of units in a large complex in Osaka. The decision overturned a lower court ruling that had supported the owners, who refused to pay the fee by saying that it was unfair. The judges in the higher court said “no,” the fee was perfectly legal and proper. Read More

Retreat

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On Jan. 22 the land ministry announced that inspection criteria for construction of new homes and condominiums would be simplified starting sometime in June. At present it takes about 70 days for new construction to be approved after the proper documents are submitted, and the ministry wants to cut this period in half so as to stimulate new home construction, which is sluggish.

Criteria for inspection of documents was made stricter after the 2005 scandal that exposed how some architects and builders were forging documents regarding the strength of materials used in construction of new buildings. As a result a number of hotels and condominiums had to be rebuilt in order to meet earthquake standards. In 2006 the land ministry tightened inspection procedures of these documents and since then the number of new housing starts had declined.

Of course, the ministry acknowledges that the main reason for this decline is the subsequent recession and the population shrinkage that will continue in the future. Housing starts, after all, have been declining since they peaked in 1990 at 1.7 million units. Between Jan. and Nov. of last year, only 719,000 units were built. Does this mean business will be back to normal, with all the negative connotations that cliche carries?